The rise in advance tax collections in Q1 on a low base
The total direct tax collections of the Centre was Rs. 1,85,871 crores as of June 15 this fiscal, which is double the level in the previous period, this due to a low base, a pick-up in exports, lower refunds and away from better compliance. The advance tax collections of the first quarter of FY22 was around Rs. 28,780 crores up to 146% higher on the year, as the June 15 deadline just passed.
The chart portrays the collections, a clear reflection of the corporate profitability of the advance tax collections, which is still way below the level of FY20, which is the year before Covid ruined the economy, globally. The taxpayers would just have to deposit 15% of their estimated annual tax as an advance tax in the first quarter of the fiscal year.
The total direct tax collections include the personal income tax, the security transaction tax at Rs. 1,11,043 crores and the corporation tax at Rs. 74,356 crores, collected as of June 15. The refunds have drastically declined by 32% to Rs. 30,731 crores as of June 15 of FY22 when compared with Rs. 45,143 crores in the year-ago period.
“We are cautiously optimistic at this stage. Direct tax numbers not only speak of the strong and system bound foundations of the tax department but also the resilience of many sectors of the economy which stood up to the current challenges,” JB Mohapatra, the Central Board of Direct Taxes chairman had mentioned recently.
“The jump in the direct tax collections in Q1FY22 relative to Q1FY21 reflects healthy exports and a continuation of various industrial and construction activities, given the lower stringency of the staggered regional lockdowns in 2021 vis a vis the nationwide lockdown in 2020. This supports our expectation that GDP will record a double-digit expansion in Q1FY22,” stated the chief economist of the rating agency ICRA, Aditi Nayar.
The gross direct tax collections before the refunds have risen up by 57% up to Rs, 2,16,602 crores as of June 15, 2021, when compared to the Rs. 1,37,825 crores in the corresponding period of the preceding year. This also includes the CIT which is at Rs. 96,923 crores and the PIT at Rs. 1,19,197 crores. Besides the advance taxes, which was a minor head wise collection that comprises the taxes deducted at a source of Rs. 1,56,824 crores, self-assessment tax of Rs 15,343 crore, regular assessment tax of Rs 14,079 crore, dividend distribution tax of Rs 1,086 crore and tax under other minor heads of Rs 491 crore as of June 15 of FY22.
“This (Q1FY22 advance tax) comprises CIT at Rs 18,358 crore and PIT at Rs 10,422 crore. The advance tax collections is expected to increase as further information is received from Banks,” the CBDT had mentioned in a recent statement.